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Why Dark Horse Got Their Digital Strategy Right the First Time

by  in Comic News Comment
Why Dark Horse Got Their Digital Strategy Right the First Time

A few weeks ago, Dark Horse Comics announced it would release all their new comics simultaneously in print and digital formats beginning December 14th. That in itself isn’t unusual these days, but Dark Horse initially indicated (in an e-mail to me) the comics would be priced “between 99 cents and $1.99 for single issues, with the occasional freebie — and trades ranging from $2.99 to $7.99,” information reported elsewhere as well.

The reaction from brick-and-mortar retailers was swift and negative. “I have access to the CBIA, a retailers forum, and the pushback was intense, and included overt threats of drastically lowered orders and even total boycotts of the line,” “The Massive” creator Brian Wood wrote in a Tumblr post that quickly made the rounds of the comics blogosphere. At Bleeding Cool, Rich Johnston reported that two retailers, Jetpack Comics and Larry’s Comics, had announced they would not stock Dark Horse comics (although they would continue to take special orders). The upshot was that Dark Horse President Mike Richardson issued a “clarification” stating new digital comics would be priced at $2.99 for the first month, after which the price would drop to $1.99.

So, given the opportunity to give their readers what they want — new digital comics at a price that they perceive as reasonable — and potentially expand the audience from niche to something approaching mainstream, Dark Horse chose to retreat and give the retailers what they want instead. I think Dark Horse was wrong, and here are six reasons why:

1. It’s what readers want. Not pundits, not economists, not retailers — readers. The original Bleeding Cool post had 170 comments, and they were overwhelmingly in favor of what they thought Dark Horse was about to do. While it’s anecdotal evidence, that sort of reaction was seen in multiple locations.

2. Even at the reduced price, Dark Horse probably makes more money on digital than print comics, because it is selling direct to customers and eliminating all the middlemen. For print comics, Diamond Comics Distributors pays the publisher about 40% of cover price. For digital comics, distributors such as comiXology take roughly 30%, and so does Apple, so the numbers are about the same. Since Dark Horse doesn’t sell through a distributor — they designed and maintain their web store — they get to keep all the money, although they still have to pay Apple for purchases made through their iOS app. Even so, they end up with 70% of cover price, not a measly 40%. Of course, they have to pay their webmaster and other digital staff, but that is a fixed cost, and the more comics they sell, the smaller a factor it is.

3. Readers perceive digital comics, and e-books in general, as being intrinsically less valuable than print media. There are legitimate reasons for this, and attempts by publishers to price e-books at or near print prices have alienated potential customers and probably hurt sales — I know I have passed on a book more than once when I saw that the Kindle edition was priced higher than print. Dark Horse’s pricing reflects that perception. No matter how many times publishers insist that a digital comic is worth $3.99, if your customers feel otherwise, they won’t buy it.

4. Digital media have something the comics retail infrastructure is sorely lacking: Penetration. Many communities don’t have comics stores. Many do have stores but no one knows they exist. Almost everyone has a computer, though. The flipside is that these newer and more casual customers don’t have the emotional attachment that diehard fans do, and if comics are priced too high, they will stay away.

5. Digital gives the publisher more control of how their product is marketed. There is no Barnes & Noble for comics. Comics stores are sole proprietorships and they vary widely; some are great, some are terrible, and some cater only to certain types of customers. A good comics shop is a real asset to the industry, but a bad comics shop can hurt it — especially if there are no alternatives. Digital is that alternative.

6. Other publishers are already doing it. Archie Comics publishes all its comics simultaneously in digital and print, with digital priced $1 cheaper. Viz is publishing a number of its Shonen Jump manga digitally ahead of the print date, at about half the price of print. Neither company is a huge player in the direct market, but Viz has a pretty robust bookstore presence, so it must be seeing a real upside to digital. (Like Dark Horse, Viz has its own digital store, both an iOS app and a website that bypasses iTunes.)

Here’s the bottom line: Publishers are in business to make money, not support the direct market. Up ’til now, the direct market was the best channel for them, but it has a lot of limitations, geographical and otherwise, that simply don’t exist with digital distribution.

The direct market does a very good job of marketing superhero comics to superhero fans. The social and sensory aspects — the Wednesday routine, the recommendations and arguments, even the look and feel of print — are important to those readers, and they don’t seem to be deserting the Direct Market in droves. As far as anyone can tell, their digital purchases supplement what they buy each week in their local brick-and-mortar store.

That’s just one potential pool of customers, though. Dark Horse has licensed titles like Star Wars and Buffy that have a lot of appeal to fans of the franchise — fans who don’t necessarily define themselves as comics readers and will never go to a comics store. And then there are the readers who left comics for one reason or another — often because of finances, lack of a local store, or storage issues — but have been drawn back in by digital comics. (You see a lot of this in comics forums.) Digital is a great way to reach both those audiences, but high prices will keep them away.

Serious, dedicated fans may feel that $2.99 or $3.99 is a reasonable price for 24 to 32 pages of content, but to be honest, the rest of the world doesn’t. When you can buy a 200-page digital volume of manga for $4.99, or a 300-page prose ebook for $9.99, digital comics look ludicrously overpriced. If Dark Horse can sell a comic book to a customer for $1.99 — a comic that customer would never buy at a higher price point — then not to do so is leaving money on the table. Businesses use this sort of variable pricing all the time (buy an airline ticket lately?) and while it may irritate retailers (and airline travelers), there’s no moral issue involved. It’s just a way to maximize profit.

The direct market is deep, but in order to survive and thrive, comics publishers need to go wide. Whether Dark Horse changed its strategy or someone misspoke, making all its comics available for $1.99 or less would have been a visionary move that broadened the audience and made more money for both the company and its creators. It’s the difference between remaining a niche medium and taking the first step toward becoming a mass medium. Because it has its own storefront, Dark Horse was the company that stood to gain the most from such a move, but savvy retailers could find ways to capitalize on it as well.

Print media will always be with us, and hopefully comics retailers will, too. I don’t expect them to go the way of the horse and carriage, but I do expect them to adapt to the new reality, because digital isn’t going away — and because forcing your customers and potential customers to pay higher prices is not going to endear you to them, even if it does protect your business in the short term. As for Dark Horse, this was its moment to shift the paradigm; it’s too bad someone blinked.

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